Are Green Tariffs Right For Your Company?

This is the tenth in a series of blog posts about renewable energy options for retailers. 

As retailers look to reduce their environmental footprint and grow renewable energy investments, RILA continues to hear from our members that understanding the ever-changing renewables procurement landscape can be challenging. That's why we are developing a new renewable energy guide, which highlights fundamentals of different procurement options and key considerations, specifically for retailers. 

In a series of blog posts, we'll be outlining various topics featured in the guide; the next chapter in our series, Renewable Energy Procurement through Green Tariffs, is outlined below. We are excited to share the chapters one by one, and to work with partners like World Resources Institute in their development. 
 

What are Green Tariffs? 

Green tariffs are programs by which energy consumers – like retailers – can purchase large-scale renewable energy from local utilities more cost effectively than through traditional procurement programs. Eligible customers can buy both the energy from a renewable energy project and the associated Renewable Energy Certificates (RECs) in places where there is no retail electricity choice.  
 

While local utilities typically cover the capital cost for the renewable energy projects, green tariff consumers effectively help pay the cost of the project off over the contracted time through their electric bill. This system allows larger buyers to support utility RE procurement while ensuring that other utility customers are not financially harmed or affected in the process. 

Who uses them/What are the key benefits? 

Green tariffs have been designed to address the needs of large energy buyers, including corporations and cities/municipalities. Corporate buyers, including retailers like Apple, REI, Starbucks, Target, and Walmart have utilized green tariffs to contract close to two Gigawatts of new renewable energy.  

Green tariffs help companies reach RE goals when on-site generation is infeasible or insufficient, and when internal resources to execute and manage third-party RE projects are minimal. They also help provide cost predictability through varying contract lengths, fixed prices, or market-based rates for RE, and allow companies to establish a more direct financial connection to the RE they procure within given geographic areas. 
 

Is Pursuing Green Tariffs right for your company? 

Advantages: 

  • Avoid capital costs 
  • Access a cost-competitive hedge against market volatility 
  • Aggregate demand 
  • Act as a climate leader 
  • No expertise required  
     

Downsides: 

  • One size does not fit all 
  • Limited availability 
  • Price premium 

 
Ready to move forward with Green Tariffs? 
 
Like any renewable energy initiative, it is important to identify what commitments have been made in the past and their outcomes. By engaging stakeholders across the organization such as your finance team, you can accurately evaluate the best renewables strategy for your company. 
 
WRI's U.S. Renewable Energy Map presents the RE purchasing options for corporate buyers in each state; in addition, their Emerging Green Tariff in U.S. Regulated Electricity Markets resource offers a detailed compilation of the approved and proposed green tariffs. Actively engaging with local electricity providers to help develop a green tariffs program can also be helpful in ensuring the offering reflects the needs of your company and fellow buyers.   
 
To learn more about green tariffs, if they are a worthwhile consideration for your company, and next steps for moving forward, access the full chapter in the renewable energy guide here and all the chapters published so far here. For more information about RILA's renewable energy initiatives, contact Erin Hiatt.

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